Yesterday, I attended a Brexit roundtable discussion with Secretary of State for Scotland, David Mundell, just as the Political Declaration about the future relationship between the UK and the EU had been agreed. The Secretary of State explained why the UK Government thinks that this is the best possible deal for Scotland and the UK given the alternatives of a no deal, a General Election or a second referendum.

To help ScotlandIS members make up their minds about the proposed deal, I have pulled together key points of relevance to Scotland’s digital technologies industry and will also explain the next steps in the Brexit process.

What does the deal include?

The deal which the UK Government agreed with the European Commission consists of two parts. First, the Withdrawal Agreement which sets out the terms of the UK’s departure from the EU, including financial obligations, rights of EU citizens in the UK and UK citizens in the EU as well as the Irish border question. Second, the Political Declaration which outlines the broad terms for the future relationship between the UK and EU after the end of the transition period (31 December 2020 with an option to extend this by up to one to two years). The Withdrawal Agreement is very detailed and technical whereas the Political Declaration can be considered as a declaration of intent which sets out the general direction of travel but remains open to interpretation and further negotiation.

Market access

The rules for trade between the UK and the EU will stay the same until the end of the transition period. Both sides aim to have an UK-EU trade agreement in place by summer 2020. If this can’t be achieved, the they can agree to extend the transition period or the backstop solution for the border with Ireland will come into force. This backstop would introduce a “single customs territory” between the EU and the UK which would cover all goods except fishery products.

Less detail is available on the future of trade in services which is crucial for our industry. The Political Declaration indicates that both sides aim for a deal that offers better conditions than the EU currently has with any other country or region. In relation to digital goods and services they intent to “facilitate electronic commerce, address unjustified barriers to trade by electronic means, and ensure an open, secure and trustworthy online environment for businesses and consumers.”

People and access to skills

EU nationals that already live in the UK or move here before the 31 December 2020 will be able to stay and apply for the newly introduced “settled status” which allows them to live and work in the UK as long as they like (fee of £65 applies). Details on the process and rights associated are available here. UK nationals living in EU countries will have the same rights in principle but only in their country of residence, so they will lose their freedom to move freely between EU27 countries.

The immigrations rules that will apply from 2021 are still being developed in the UK Government. A white paper on this has been announced a while ago and David Mundell said yesterday that it “will be published shortly”. They aim to have the new immigration legislation in place before the end of March 2019. For short term visits will remain visa-free, according to the Political Declaration.

Data

The EU will start the process for establishing if the UK have data protection standards that provide an adequate level of protection for EU citizens’ data. This adequacy decision is supposed to be taken before the end of 2020 and will be a requirement for future data transfers from the EU to the UK. The UK will start the necessary processes to allow for future data transfers in the other direction.

EU funding

Until the end of 2020, the UK will fully participate in the existing EU funding programmes, including Horizon 2020, which are an important source of funding and cooperation partners for Scotland’s universities and digital technologies businesses. After this, the UK will be able to participate in some of these programmes, including those on science, innovation, education and space, to some extent. The conditions for this remain to be negotiated, as well as the financial contribution the UK will have to make to these programmes.

The UK would also like to “explore options for a future relationship with the European Investment Bank”, which has been a source of funding for technology start-ups in Scotland.

Next steps

The EU heads of state will meet on 25 November in Brussels to sign off this proposed deal. Until then, negotiators will have to come to an agreement with Spain which is concerned about the deal’s provision for the future of Gibraltar. If this will be achieved, the UK Parliament will vote on the deal within the next two to three weeks. This will be a major challenge for the UK cabinet as a majority for the deal is currently far from certain. If MPs approve the deal, it will also need to be ratified by the European Parliament before the UK leaves the EU on 29 March 2019. Only after this date, talks about the EU-UK trade deal will begin, based on the Political Declaration.

I will continue to monitor the situation, keep ScotlandIS members up to date on developments and continue to communicate our industry’s needs and concerns to governments, members of parliament and officials on Scottish and UK level. Please get in touch, at svea.miesch@scotlandis.com, if you have any questions about this or would like to share your views.